“Free Money for All?” Can a Basic Income Cure Poverty and Inequality? Should It?

While scrolling through some Ted Talks on Youtube last weekend on income inequality, I was led into other videos on a “basic income” approach, including ones by Rutger Bregman, Federico Pistono and James Mulvale, among others.  I admit being rather surprised and put off at first but, after further viewing and consideration, the idea began to grow on me.  I propose it for your consideration and feedback.

The basic income, or “free money for all” approach, is elegant in its simplicity.  Each (adult, I’m assuming) citizen gets a modest check (say $1000 per month) from the Treasury, sufficient to pay, or help pay, for basic needs like housing, food and transportation.  This provides a basic floor of security for all.   It would be universal and unconditional, available to everyone as a right of citizenship.

This idea was originally floated by one of my favorite Patriots, Thomas Paine (need to check the source) at the turn of the 19th century.  In the 20th century it was embraced by liberal reformers like Martin Luther King Jr. and Bishop Desmond Tutu, as well as conservative theorists like philosopher Friedrick von Hayek and economist Milton Friedman.  It was Friedman’s Negative Income Tax (NIT) idea that inspired President Nixon (no radical, he) to propose a Family Assistance Plan in 1971, which would have sent a check to every American family below a certain level.  It passed the House but failed in the Senate, bedeviled by questions of benefit levels and where to impose cut off points for higher earners.  The basic income approach avoids that dilemma by making everyone eligible and the funds taxable, clawing back much of the benefit from high income families.

This approach cuts across ideological divisions and garners support (and opposition) from both sides.  Liberals like the social insurance concept of basic security for all and its effect of lifting many above the poverty line, while increasing choices and opportunities for working and middle class people.  Conservatives like the fact that it is more efficient and less costly than the current social welfare system, with its vast armies of counselors, social workers, caregivers, lawyers, probation and corrections officers, teachers, nurses, administrators and bureaucrats, most making a good living off the suffering of the poor.  The appeal of FAP to Nixon was it would allow him to dismantle much of the New Deal and Great Society programs he loathed in favor of simply mailing a check.

The benefits of a universal basic income include: 1) Reduce poverty and economic inequality – these are serious drags on productivity, human potential and welfare; 2) Economic efficiency – it’s cheaper to send a check than to provide numerous “services” which never seem to reduce poverty and inequality; 3) Increase human freedom and choice – people can more easily exit bad situations and choose new paths, invest in education, start a business, care for a sick loved one etc.  4) Support all work done – including child rearing, homemaking, care of relatives, part time and contingent jobs etc; 5) Cushions against structural and technological unemployment – by some estimates, artificial intelligence and automation threaten up to 50% of current jobs in the economy; 6) Makes intuitive sense – poverty, by definition, is a lack of money to meet basic needs.  Why then do we continue to provide expensive “services” to people that leave them no better off?

There are, of course, objections, such as: 1) It’s too expensive – the United States is the richest country in the history of the world, with a $20 trillion plus economy.  By some estimates we could wipe out domestic poverty for about $175 billion, or 1/4 of the Defense budget.  Is it true that “we can’t afford it,” or  that we don’t care enough to try?  2) People will stop working – Bregman cites studies from Canada, India and other nations that disprove this.  In fact, work effort in most poor countries that experimented with this actually increased.  The basic income isn’t enough to retire on and most people wouldn’t want to.  Surveys show most people want to work, be productive and contribute to society.  The question is, in our increasingly technological world, will they have that opportunity in the future?       3) It’s politically unrealistic: in our current climate, yes.  Our politics are dominated by one party that wants to continually cut taxes and redistribute to the rich, and another that wants to hold on to past gains and maintain the status quo.  Yet times change.  Ending slavery, women’s and civil rights were once deemed “hopeless” causes.  What adult over 40 ever thought they’d see gay marriage legalized?   The time is not yet “ripe” for the basic income, but who knows what the future holds, especially as rising inequality, automation and globalization increasingly threaten the fortunes of a majority of the population?

I confess, as an old New Deal Democrat, that I have reservations about this.  I instinctively dislike the idea of paying people without requiring work in return.  I believe work, however humble, is essential for the mind and spirit, a source of self worth, sociability and dignity.  I’d rather see the government guarantee full employment and provide public jobs if necessary, or adopt a much expanded Earned Income Tax Credit to redistribute profits from the top to wage subsidies for the middle and bottom.  I would also adopt a stiff “automation tax,” requiring companies that displace workers to pay a large part of their profits toward creating other jobs and retraining efforts.

Yet those jobs may be unavailable in the future.  For instance: the single largest employment category for American men is “driver” – trucks, buses, cabs, vans, delivery, Uber etc. – a job I do myself, part time.  What happens when self driving vehicles hit the road en masse in the next few years?  Also, our obsession with growth as our primary economic objective may have to yield to a more sustainable, steady state, redistributive future.  We can never end poverty with our current obscene levels of inequality; we will choke on our smog and drown in rising ocean tides long before then.  We need better levels of distribution to achieve a more just, sustainable, human society and economy.  Basic income may be one means of getting there.

 

 

 

2 thoughts on ““Free Money for All?” Can a Basic Income Cure Poverty and Inequality? Should It?”

  1. Excellent post! Basic income is definitely worth considering. Do you know if there are some countries that do have this? Switzerland voted against it in 2016. http://www.bbc.com/news/world-europe-36454060
    Cash transfer programs, like Bolsa Familia in Brazil, have been heralded as successful. The cash is tied to maintaining school attendance and regular check-ups for children.

    Your article would be great for a political science course (or a number of courses that encourage students to thoughtfully debate about important issues.) Thank you!

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    1. Thanks for replying. Limited, localized experiments have been done in Canada, UK, India and Latin America. They tend to improve health and social functioning without reducing work effort, in part because it’s not enough money to live on. One city in US, Stockton CA, is trying it on a modest basis. Brazil’s Bolsa Familia is probably the largest example. Is it universal, or does it cut off at a certain income level? Any good studies on this you can point me to?

      Like

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